According to analysts, the Irish game service company Keyword Studio could be set up to benefit from the wave of competition between consoles and the surge in consumer demand caused by the coronavirus.
In Thursday’s six-month results, London-listed Keywords Studios KWS,
Despite being hit by a coronavirus pandemic, it reported strong revenue growth and revealed a strategic acquisition that is expected to strengthen and expand its game development services.
The gaming industry is now experiencing a moment. As Sony SNE
And Microsoft MSFT,
We will send the game consoles that dominate the industry to the fourth battle. They are facing new markets from consumer demand boosted by millions of people trapped in their homes in a pandemic.
The keyword is a provider of technical services to the gaming industry and is widely available to the gaming industry. The company is a collection of small studios in 21 countries with different disciplines of expertise and abilities.
These studios offer art, audio, quality assurance, player support, and other services for a number of large corporations, including Google GOOGL.
Microsoft, EA EA,
Warner Bros., Sega 6460,
Keyword revenue was € 173.5 million in the six months to June 30, an increase of 8% over the same period last year. Pre-tax adjusted profit was € 21.7 million, 18% higher than last year. In addition, profit margins surged despite the impact on some businesses of the coronavirus.
The coronavirus pandemic has benefited the gaming industry widely, with a surge in demand from new and existing consumers. However, the pandemic has affected the ability of some game developers to work on new projects.
“As a leading provider of services to game developers, the boom in demand for new game content was also felt by keywords,” said Emily Stevens, an analyst at Hargreaves Lansdown. “But certainly there was a rise, but the keywords didn’t enjoy the astronomical boosts of Activision Blizzard (the home of brands like” Candy Crush “and” Call of Duty “). Because the company has suspended planning and launching new content and new games due to the blockade. “
The gaming industry is riding the tailwind of growing consumer demand as the industry-defining hardware giant prepares to launch the latest consoles. Both Sony’s PS5 and Microsoft’s Xbox X series will be available in mid-November, with a series of new exclusive games.
Also on Thursday, Keywords announced that they had acquired US-based Heavy Iron Studios for $ 13.3 million, and in the summer acquired Coconut Lizard and Maverick Media. Heavy Iron Studios was involved in the development of the popular “Call of Duty” game and Disney’s productions, both of which were very popular throughout the lockdown period.
“The situation is likely to improve, as keywords and their clients are now running remotely to meet the growing demand for content,” Stevens said. “But the long-awaited launch of the PlayStation 5 and Xbox X series could enter a much larger market and have an even greater impact on the company.”
Stevens said the acquisition of Heavy Iron by Keywords will add to the heat of the sector.
Other analysts are broadly bullish on the company. Analysts at Numis Securities, Goodbody, Liberum, and Stifel Nicolaus all have a company target price of over £ 2,300 per share.
Keyword stocks fell 5.5% on Thursday after the announcement of financial results and rose 0.5% on Friday, almost flat. Will Wallis of Numis Securities said there was no major cause for the decline. Instead, Wallis said, probably because stocks have abandoned some profits after a period of intense growth.
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